\u3000\u3000 Beijing Inhand Networks Technology Co.Ltd(688080) (688080)
Investment logic
Deeply cultivate the vertical industry of Internet of things, with high conversion rate of R & D achievements and significant advantages in customer structure. The company has accumulated profound technology in the fields of Internet of things communication, cloud computing and AI, and focuses on making solutions for smart power, automatic retail and smart manufacturing. At present, the income from industrial Internet of things communication, intelligent distribution network condition monitoring system (iwos), intelligent sales control system, technical services and other services is 51%, 21%, 13% and 15%. The growth rate of the industry is about 20% – 30%. The company is leading in vertical industry technology. It is predicted that CAGR will exceed the overall industry growth rate by 40% in the next three years. It is expected that the segments will drive rapid growth, and the revenue structure will change to 41%, 24%, 21% and 15% in 2024. Cloud platform makes the company’s products have strong compatibility and low R & D cost of new products; The structure of downstream customers is good, and the comprehensive gross profit margin is more than 5pct higher than the average of friends.
Smart power has broad growth space, and its technical strength has established its position in the industry. The newly disclosed investment planning of State Grid and China Southern Power Grid has increased significantly (compared with yoy51% in the 13th five year plan of China Southern Power Grid in the 14th five year plan), and the proportion of distribution network investment has continued to increase. Iwos products independently developed by the company solve the industry problem of “single-phase grounding fault detection and location of small current grounding system”: wireless time synchronization sampling technology, AI algorithm and other technologies improve the fault identification accuracy from 50% to 90%, and realize preventive maintenance. The scale of the Chinese market is 11.1 billion yuan, and the company is expected to increase its share and expand its overseas market. Considering the sequence of different links of power grid investment, the revenue growth of iwos products is expected to be 26%, 30% and 50% in 21-23 years.
The industrial Internet of things communication industry is growing rapidly. The company supports multiple protocols and platforms, and has significant brand advantages. The Internet of things industry is a long tail market with serious fragmentation. The company grasps the core scenarios and use cases, has profound accumulation of industrial communication protocols and strong compatibility. For example, the vending machine solution provides customers with SaaS including communication module, mobile payment, equipment operation, marketing and other functions, so as to grow together with downstream customers. We believe that the company’s core management has worked in Schneider and other global industrial automation and electrical leaders to help the company’s product R & D, strategic layout and brand accumulation. In the future, the company will continue to strengthen capacity-building between China and Taiwan, expand new product lines such as Internet of vehicles, and improve Wuxi Online Offline Communication Information Technology Co.Ltd(300959) channel construction, which is expected to continue to contribute to performance growth momentum. It is expected that the compound growth rate of profits will reach 40% in the next three years.
Investment proposal and valuation
We use the P / E ratio method for valuation. It is estimated that the operating revenue in the years 21-23 will be RMB 476 / 642 / 864 million and the net profit will be RMB 111 / 144 / 190 million respectively. Give the company 40 times PE in 2022, with a reasonable market value of RMB 5.76 billion. The first coverage is given a “buy” rating.
Risk
Power grid investment is less than expected, new product R & D and market promotion are less than expected, market competition is fierce, overseas market expansion is less than expected, supply chain risk, exchange rate fluctuation risk, shareholder reduction.
